The hidden costs of hidden debt

Johan Almenberg and Artashes Karapetyan
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Johan Almenberg: Swedish Ministry of Finance

No 2011/22, Working Paper from Norges Bank

Abstract: We report evidence that salience may have economically significant effects on homeowners’ borrowing behavior, through a bias in favour of less salient but more costly loans. Survey evidence corroborates the existence of such a bias. We outline a simple model in which some consumers are biased and show that under plausible assumptions this affects prices in equilibrium. Market data support the predictions of the model.

Keywords: Salience; Debt; Housing market; Co-op; Capital structure (search for similar items in EconPapers)
JEL-codes: D12 G14 G21 G32 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-01-12
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.norges-bank.no/en/news-events/news-pub ... pers/2011/WP-201122/

Related works:
Journal Article: Hidden Costs of Hidden Debt (2014)
Working Paper: The Hidden Costs of Hidden Debt (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2011_22

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